Merck has entered into a binding agreement to acquire biotechnology company Prometheus Biosciences for $10.8 billion to strengthen its immunology programme. Completion of the transaction is subject to shareholder approval and is expected to occur in the third quarter of this year.

Founded in 1995, San Diego-based Prometheus is a pioneer in precision medicine in the discovery, development and commercialization of novel therapeutic and companion diagnostic products for the treatment of immune-mediated diseases. Recently, Prometheus announced promising clinical trial results for its drug designed to treat ulcerative colitis and Crohn's disease. Merck is actively seeking partnerships and acquisitions to protect itself from a potential drop in revenue as patents on its successful cancer immunotherapy drug Keytruda, which generated $21 billion in sales last year, expire in the coming years.

The pharmaceutical industry has recently seen a sharp increase in mergers and acquisitions. Pfizer made headlines earlier this year with its deal to take over biotech company Seagen for a staggering $43 billion to gain access to innovative targeted cancer drugs. In addition, in January, several smaller European pharmaceutical companies announced acquisitions that paid significant premiums. This trend suggests a growing interest in strategic acquisitions as a means to expand portfolios and foster innovation in the pharmaceutical sector.

Merck has made a $200-per-share takeover bid for Prometheus, a significant premium of 75% to the company's closing stock price on Friday, April 14.